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Global Employment Law - What's New?
Spring 2016

Welcome to our international quarterly newsletter. This Spring 2016 edition focuses on employment, pensions and benefits legal developments which took place internationally and in the EU, Belgium, France, Germany, Hong Kong, Italy, Japan, the Netherlands, Spain, the UK and the US over the past 3 months.


Attempts to regulate the Sharing Economy

While the European Commission is working towards issuing guidelines on how to apply existing EU legislation to the sharing economy, several countries are paying greater attention to the phenomenon, in the attempt to regulate all those new global giants such as Uber, Taskrabbit and Airbnb – or even local players like Menu Next Door and ListMinut.
On 2 March, the Sharing Economy Act was presented to the Italian Parliament, aiming to regulate and promote digital platforms for the sharing of goods and services.
Similarly, the Belgian Minister of the Digital Agenda recently proposed to tax performances carried out through collaborative platforms at a rate of 10 to 15% collected at source, with a view to improve transparency and regulation. Given that most workers resorting to online platforms do so for the purposes of supplementing their main income, in order to benefit from the proposed favourable tax regime, the earnings from such “secondary” occupations will be capped between 6000 and 10000 euros per year. Beyond this threshold, the relevant income is to be considered as income from professional activities, thus taxed accordingly.
If on the one hand concerned companies generally agree with such proposals, on the other hand unionists and lawyers raise workers’ social status and employment law issues, criticising these initiatives for risking to encourage workforce casualization.
Outside of the EU, as the main reaction to the alleged misclassification of workers as independent contractors, several class action lawsuits have been filed in the UK and the US. Meanwhile, a recent California bill aims to allow “gig economy” workers to unionize and collectively bargain with their app-based employers.
If you wish to know more about these legislative developments, please read our full article on Freshfields Digital.

European Union

EU Parliament adopts new Data Protection Regulation

The EU Parliament finally adopted the General Data Protection Regulation on 14 April. It is expected that it will enter into force 20 days after its publication in the EU Official Journal, estimated to be by July 2016. Its provisions will be directly applicable in all Member States two years after this date (ie in mid-2018). For more details on the new rules, please see our summary of the Regulation here.

WP29 opinion on Privacy Shield released

The Article 29 Working Party, an independent European body composed of representatives of the national data protection authorities, the European Data Protection Supervisor and the European Commission, recently issued a non-binding opinion on the EU-US Privacy Shield and accompanying working document on European essential guarantees, paving the way for the adoption of the new framework for transatlantic commercial data transfers.
European Justice Commissioner Věra Jourová explained that the EU Commission will “work swiftly” to include the WP29’s recommendations into the Privacy Shield agreement.
The Member States have to give a green light to Privacy Shield in the so-called Article 31 Committee and will meet on 29 April and 19 May. The EU Commission will try to make the amendments ahead of these meetings to ensure that the new framework can be in place in June.
In its opinion, the Working Party did however request further clarifications and outline serious concerns that the Commission will try to address. It is therefore unclear if the timetable outlined above remains realistic.
Among other things, the Working Party also asked for a review of the Privacy Shield in two years’ time, when the new General Data Protection Regulation will enter into force.

EU proposes to strengthen the protection of posted workers

On 8 March, the European Commission announced a much anticipated legislative proposal to toughen laws regulating the posting of workers towards a fairer internal market.
Posting of workers in the EU is regulated by a directive (96/71/EC) that dates back to 1996, but since its adoption the labour market in Europe has dramatically changed and divergences in wages in Member states have increased, making it easy for employers to abuse existing EU rules and undercut local labour laws, the Commission says.
The proposed changes are intended to promote cross border service provision while ensuring “the same pay for the same job at the same place”.
As 40 per cent of all posted workers in the EU are in the construction sector, under the new rules construction companies and other employers will be required to grant better pay to temporary workers they enlist from other EU countries.
The proposal sets out that workers posted for more than two years should be fully covered by the labour law of the host country and that conditions applying to local temporary agency workers within a member state also apply to cross border temporary agency workers.
The new proposal foresees that the same rules on remuneration of the host Member State apply, as laid down by law or by universally applicable collective bargaining agreements. This mean that posted and local workers will be subject to the same rules when it comes to remuneration, which will not only include the minimum rates of pay, but also other elements such as bonuses or allowances or pay increases according to seniority.
The EU Parliament and Council will review the updated rules in the following months before agreeing on a final version to adopt.
This development follows other protection measures that complement the 1996 Directive, such as the 2014 Enforcement Directive, which we also reported on. The Enforcement Directive introduced the idea of joint liability between the end user and the employer of the posted workers, even though limited to any outstanding net remuneration, corresponding to the minimum salary. This joint liability regime is compulsory for the construction industry and optional for others.

EU Parliament votes on Trade Secrets Directive

On 14 April, the EU Parliament approved the new EU Trade Secrets Directive in first reading (press release), which sets common EU rules on the protection of trade secrets against theft or misuse. MEPs approved a revised agreement reached last December that added some safeguards for whistleblowers, giving them protection if they face legal charges for breaching trade secrets rules in the public interest. It is the first time that the protection of whistleblowers is explicitly mentioned in a European piece of legislation. Nevertheless, some claim the new law also creates “major uncertainties” about the role of whistleblowers and investigative journalist. Therefore a comprehensive set of European rules on whistleblower protection remains much anticipated. It will now be up to the EU Commission to vote on the directive, before it becomes law across the EU by 2018.

Financial incentives to whistleblowers

The Market Abuse Regulation (596/2014/EU) (MAR) requires EU member states to put in place effective mechanisms to encourage the reporting of breaches of MAR as well as protections for whistleblowers.
The European Securities and Markets Authority advised that competent authorities should have in place dedicated, autonomous communications channels for the reporting of breaches and protect the identity of reporting and reported persons by treating as confidential the reporting person’s name, email and other contact details, and even the existence of the report if possible.
If confidentiality cannot be granted because disclosure of the reporting person’s identity is required by law or the investigation may lead to the person being identified by his employer, the competent authority must inform him of this. Making a report will not be a breach of any restriction on disclosure contained in any contractual, legislative or administrative provision.
Mirroring the US regulatory landscape, MAR also provides member states with the power to offer financial incentives to individuals that have no pre-existing legal or contractual duty to report, who come forward with new information that results in the imposition of administrative or criminal sanctions.
It is not expected that these measures will have a significant effect in the UK because existing UK legislation already provides considerable protection for whistleblowers, and the Financial Conduct Authority and the Prudential Regulation Authority have indicated that they do not propose to offer financial incentives for whistleblowers, but other member states could take a different approach MAR will take direct effect on 3 July 2016 (with some exceptions), repealing the existing Market Abuse Directive (2003/6/EC) and its implementing legislation.

ESMA reports on guidelines on sound remuneration policies under UCITS V Directive

The European Securities and Markets Authority (ESMA) recently published its final report (ESMA/2016/411) on guidelines on sound remuneration policies under the UCITS V Directive (2014/91/EU) and Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD). The report considers the feedback received from various stakeholders to the consultation paper issued last summer on the proposed guidelines.
The UCITS remuneration guidelines are designed to clarify the UCITS V Directive requirements for management companies when establishing and applying a remuneration policy for key staff. They provide guidance on issues such as proportionality, governance of remuneration, and requirements on risk alignment and disclosure. They will apply to UCITS management companies and national competent authorities (NCAs) from 1 January 2017.
The ESMA report shows that the overwhelming majority of respondents supported the approach on proportionality set out in its consultation paper on UCITS Remuneration Guidelines, while criticising the conservative approach followed by the European Banking Authority (EBA) in their guidelines released in early 2016 and separate opinion on proportionality. While the EBA does not foresee the possibility of disapplying any of the remuneration principles under the CRD IV, ESMA found that the approach followed by EBA in the context of CRD IV relates to a different sector of the financial services industry and that the contrasting nature of the UCITS sector could justify a different approach to proportionality. 

Jean-François Gerard

Ludovica Mascaretti


Draft law aims at defining the freedom to work

As a reaction to events occurred in relation to recent national strikes, with employees not participating to the strikes being prevented from accessing their work premises, a proposed draft law from November 2015 aims at guaranteeing not only the freedom to work but also the freedom to access the workplace.
However, the draft law is rather vague and does not define what would constitute a breach to the freedom to access the workplace, hence some criticism is foreseen.
Also, the draft seems to mainly target strike pickets, which the European Committee of Social Rights has considered as a normal exercise of the right to strike. It remains to be seen whether such law will be enforceable at all in practice.

Privacy and automatic forwarding of emails

In a decision dated 6 January 2016, the Brussels labour court found that the automatic redirecting of employees’ business emails to the CEO’s mailbox following dismissal was not a violation of privacy, on the grounds that the redirecting only concerned the professional email address and that it was the employee’s decision to communicate that address to non-professional contacts, creating the risk to receive private emails on such professional address.
The court however did not touch on whether the company’s policies provided for terms of use of the professional email address, which might have influenced on the outcome of the decision. Neither did the court specify whether the automatic redirecting was, in fact, reasonably justified by the legitimate interest of the company.

Satya Staes Polet 


Labour reforms in France: two steps forward?

The draft loi El Khomri (named after the minister for employment) - containing various employer-friendly measures relating in particular to damages for unfair dismissal, grounds to justify economic dismissals (redundancies) and flexible working time arrangements in companies not covered by a collective agreement - has met stiff opposition from trade unions.
The draft law triggered demonstrations across France and a SNCF strike, to which the government responded by promising to amend its proposals.
The original proposals included the following measures:

  • A cap on damages for unfair dismissals (with a scale running from three to 15 months’ pay depending on length of service). Currently, no cap is set (though a statutory minimum award equal to six months’ pay applies where the employee has at least two years’ service, unless the company has fewer than 11 employees).
  • A change to the geographic scope applicable for purposes of assessing whether a company has valid economic grounds for dismissing staff. Currently French case law provides that labour courts must look at the worldwide economic situation of the group to which the employing entity belongs (or at least that of the worldwide business division/segment to which it belongs). This means that economic dismissals in a French subsidiary that has repeatedly suffered heavy losses could be considered unfair (and give rise to an award of damages) if the group to which the subsidiary belongs to is profitable as a whole. Under the loi El Khomri, French judges would instead only look at the economic situation of the company/group in France.

The draft legislation was intended to give employers greater room to negotiate derogations from statutory rules with their union delegates at company level, and to encourage inbound investment in France.
On 14 March the government presented significant changes to the proposals. Some measures have effectively been abandoned. In particular, there will be no cap on damages for unfair dismissal; instead, a range of numbers of months’ pay depending on length of service will be provided for guidance only. This was already envisaged by the loi Macron adopted in August 2015, but has not been implemented yet as it was overtaken by the El Khomri proposals.
However, the proposed changes to the rules on economic dismissals (including the geographic scope of economic grounds) are largely intact, so there is a fair chance that they will be enacted in the coming months.

New data protection laws to implement GDPR fines well beforehand

At the current date and according to article 47 of the law dated 6 January 1978, the French Data Protection Authority could impose following administrative fines to data owners failing to comply with data protection laws:

  • a maximum fine amounting to €150,000 for a first violation;
  • a maximum fine that could be increased up to €300,000, in the event of a further violation within a five year-period after the first sanction or, when a company is concerned, 5% of its annual turnover for the previous year (excluding taxes), within the same time limit.

Certainly, sanctions imposed by the Data Protection Authority in the event of a data infringement are likely to have zero impact on bigger companies but may substantially affect small start-ups.
On this basis, the French National Assembly approved a bill entitled “For a Digital Republic” at first reading on 26 January 2016, which anticipates the forthcoming EU General Data Protection Regulation (GDPR) that will be fully applicable from 2018. The new bill introduces major changes in data protection regulation and will strengthen the powers of the French Data Protection Authority.
It provides for two level of fines, depending on the seriousness of the violations.
As a matter of principle, the higher fines should be applied, providing for:

  • a fine up to €20 mln; or
  • when a company is concerned, up to 4% of the total worldwide annual turnover of the year preceding the infringement, whichever is greater.

The lower level of fines should be applied limitedly to violations exhaustively listed by the bill (for example, to the processing of personal data without having undertaken the required formalities within the CNIL) and includes the following penalties:

  • a fine up to € 10 mln; or
  • when a company is concerned, up to 2% of the total worldwide annual turnover of the year preceding the infringement, whichever is greater.

In any case, any fine imposed by the French Data Protection Authority will have to take into account several criteria (such as, for example, whether the violation was intentional or not, the measures taken to limit the damages occasioned by such violation or the level of cooperation with the Commission).
In addition to the increase of the level of fines, the Data Protection Authority would have the right to:

  • sentence the offender without prior notice and request to respect the data protection laws (where the violation could not be cured);
  • ask the offender to inform the affected individuals that their rights were violated.

It goes without saying that these new measures will probably make big tech corporations handling data uneasy.

Gwen Senlanne


A new draft legislation on equal pay

On 9 December 2015 a draft legislation on equal pay (Entgeltgleichheitsgesetz) was presented by the Federal Ministry of Family Affairs and entered into the status of “early coordination”, i.e. a period of consultation between the ministerial departments and the Chancellor’s Office.
The reason for the new legislation is the continuing statistical gender pay gap. Initial reactions of commentators show that the size of the gap as well as the need for this legislation in addition to the existing national and European laws against (gender) discrimination is highly controversial.


In the coalition agreement of 2013 the German government agreed to pass a law that all companies with a headcount of at least 500 employees shall file reports on promotion of woman and equal pay and provide employees with a right to information. The draft legislation (which is still not publicly available) goes far beyond this announcement and includes three main aspects relevant for employers:

1. Information right for individual employees;
2. Obligation to implement an assessment procedure to review compliance with equal pay principles for companies with at least 500 employees;
3. Reporting obligation concerning female promotion and equal pay for companies with at least 500 employees.

Request for Information

The draft legislation provides for an information right of individual employees concerning (i) the criteria for determining their own salary as well as (ii) the criteria and procedure for determining salary for equal work or work of equal value predominately performed by the opposite sex and (iii) the average monthly salary of a group of at least five members of the opposite sex performing equal work or work of equal value.
As a general rule, employees will be able to file such information request every two years.
If the employer does not answer the information request within one month or if the answer is incomplete, this will trigger a reversal in the burden of proof in a legal proceeding, i.e. the employer will have to prove that there is no violation of the equal pay principles. If a pay gap exists, the employee can claim for upward adjustment of the salary including additional payment for a retroactive period of three years plus the current calendar year. Any contrary exclusion clauses in employment contracts or collective bargaining agreements do not apply.

Assessment procedure

Companies employing at least 500 employees will be obliged to check compliance of their salary components and conditions with the equal pay principles. The assessment needs to follow a certified procedure. In smaller companies the works council will have the right to request an assessment procedure if an employee’s request for information lead to objective indications of gender-based discrimination.
This assessment procedure has to take place every three years (every five years if the company is bound by collective bargaining agreements).

Reporting obligation

Following the assessment procedure, the company is obliged to publish a report concerning the promotion of women and equal pay. The report will be part of the annual status report of the company or published on the company’s website.

Works council rights

The implementation of the draft legislation will be accompanied by a significant strengthening of the works council’s information and consultation rights in the field of equal pay.
The works council will be involved in the assessment procedure and the implementation of measures following the determination of violations of the equal pay principles. In case of gross violations of the equal pay regulations, the works council or a trade union can file a claim against the employer to obtain an order enjoining him to cease and desist from an act, or to perform an act.
Furthermore, an additional co-determination right is created with regard to measures to implement the equal pay principles.

Further innovations

Contractual obligations stating that the salary amount is subject to rules of confidentiality are void. Moreover, the employer is obliged to specify the minimum salary in the job advertisement and indicate if this is the basis for further negotiations.


The Federal Ministry of Family Affairs has not provided any information on the timetable of the legislative procedure so far. The significant criticism of the draft may lead to further adjustments.

Julia Förster

Hong Kong

Increased powers to Labour Tribunal

There have been ongoing discussions in Hong Kong in relation to the powers of the Labour Tribunal. Currently the Labour Tribunal can make an order for reinstatement or re-engagement of an employee where he or she has been dismissed without a valid reason or unlawfully, but only if the employer and the employee mutually agree to this. In practice, it is unlikely that an employer would consent to an order of reinstatement or re-engagement, which means the order is rarely made by the Labour Tribunal. However, this is about to change as the Employment (Amendment) Ordinance Bill will give the Labour Tribunal increased powers to make an order of reinstatement or re-engagement even where the employer does not agree, provided that certain conditions are met. It is not yet known when the Bill will come into force.

Equal Opportunities Commission recommends changes to discrimination legislations

Another area of recent development in Hong Kong is the recent submissions made by the Equal Opportunities Commission to the government. The Commission have recommended that a number of changes be made to the current framework of discrimination legislations in Hong Kong, such as introducing a statutory right for women to return to their previous role or a suitable alternative role after maternity leave, requiring employers to make reasonable accommodation for persons with disabilities and expanding the definition of indirect discrimination. At the moment it is not clear whether the government will accept these recommendations and if they do, when the amendments will come into force.

Stephanie Chiu


New law provisions for self-employed workers

One of the main aims of the recently implemented labour market reform (the Jobs Act), was to discourage self-employment relationships by facilitating their reclassification into employment. As a result, a stricter set of provisions on self-employment is in force from 1 January 2016.
In particular, according to the new piece of legislation, the rules governing employment relationships shall apply to those self-employed workers whose working activity is (i) performed on a personal and continuous basis, and (ii) organized/directed by the employer, also with regard to working times and place.
Therefore, based on these new provisions, self-employed workers would be reclassified as employees in the event that the abovementioned features are ascertained in court.
However, uncertainties remain as to the interpretation of such new regulation and, in particular, it remains to be seen how Italian Courts will construe the expression «working activity organized/directed by the employer».
In any case, from now on, particular attention should be paid prior to entering into self-employment relationships, so as to assess in advance - and thus minimise - any potential risk of reclassification into employment.

New procedure for resignation and mutual termination

In order to curb the phenomenon of “blank resignation” (i.e. when an employee is required or forced by the employer to sign at the time of his/her recruitment blank resignation forms with the date omitted), new procedural rules on resignation and mutual termination are now in force.
As from 12 March 2016, resignations and mutual terminations must be made online by the relevant employee filling out a specific form provided on the website of the Ministry of Labour to be forwarded - once completed - to both the employer and the Local Employment Office. Any resignation or mutual termination of employment are ineffective unless implemented through this new procedure.

Luca Capone


Introduction of stress checks

The amendment to the Industrial Safety and Health Act (the Act), enacted on 1 December 2015, introduces an obligation on employers that hire more than 50 employees to undertake employee “stress checks“ to assess the level of psychological burden that employees are carrying. The stress check must be conducted more than once per year and is supposed to be performed in the following way:
(i) The employer asks its employees to fill out a questionnaire containing questions on the source of stress, any symptoms caused by stress and support received from surrounding people;
(ii) Either internal or external health professionals who are designated to carry out the stress check (the Professionals) collect the questionnaire;
(iii) The Professionals assess the stress level of the employees and select those who are under high stress and in need of doctors’ in-person counselling;
(iv) The Professionals directly notify the employees of the result of their stress checks;
(v) The Professionals provide the employer with the result of employees’ stress checks subject to employees’ approval; and
(vi) The employer retains the result of the employee stress checks.
Employers are also expected to set rules regarding the implementation of the stress checks, based on the results of investigations and deliberations of the company’s health committee, and to inform employees of such rules, in advance of conducting the checks. Further, employers are required to report on the state of implementation of the stress check and on any subsequent in-person counselling to the Labour Standards Inspection Office once per year.
While employers are obligated to conduct employee stress checks, the Act does not require employees to undergo stress checks—in other words, employers will not be penalised even if employees refuse to be checked. It remains to be seen how this will work in practice.

Seri Takahashi

The Netherlands

Whistleblowing protection

As per 1 July 2016, the Dutch Whistleblowers (Safe Haven) Act will enter into force. Based on this Act, employers with 50 or more employees are obliged to adopt an internal whistleblowing policy. In addition, the Act provides for the establishment of a body, which creates a ‘safe haven’ for potential whistleblowers where they can get independent advice and which has, under specific circumstances, the competence to investigate cases of alleged social wrongdoings. However, the Act states that (alleged) social wrongdoings must be reported internally to the employer in the first place. In addition, based on the Dutch Works Council Act, the introduction and implementation of a whistleblowing policy triggers a right of the works council of prior approval.

Brechje Nollen


Calculation of severance compensation for unfair dismissal

In a previous edition we reported on a Supreme Court judgment that we understood to be wrong, and that substantially increased the severance cost for employers. We hoped for a reconsideration, and here it is.
One of the aims of the 2012 employment law reform was to reduce the cost of terminations. Thus, the severance applicable to unfair dismissals was reduced from 45 days of salary per year of service (with a maximum of 42 months) to 33 days of salary per year of service (with a maximum of 720 days), including a transitional regime for agreements entered into before the Labour Reform came into force. During such transitional regime a judgment of 29 September 2014 came as a surprise, stating that the 720-day limit only applied to terminations of employment agreements executed from 12 February 2012, but not to terminations of agreements entered into before that date.
The Supreme Court, with two new judgments dated 2 and 18 February 2016, has finally put an end to the discussion. The limit of the severance for the whole contractual relationship, including the period before and after the reform, cannot exceed the 24 months/720 days limit, unless the "accrued" severance had already exceeded that limit on 12 February 2012, in which case such higher amount should be considered as the maximum severance, and however in no case should this amount exceed 42 months of salary.

Video monitoring of employees' obligations

Following irregularities in a payment point of one of their shops, discovered thanks to a software control system, an employer decided to install CCTV cameras to monitor it. Employees were not informed of the new video surveillance system, however the company put an information notice in a public and visible location. By means of the video monitoring activity, the company was able to catch the employee who had been stealing money from the cash register and dismiss her for cause.
The employee brought a claim against the company arguing that the evidence that lead to her dismissal had not been legally obtained, and that therefore the dismissal should be declared null and void for breach of fundamental rights. After her claim was rejected both in the first and second instances, she lodged an appeal before the Constitutional court, which was again rejected in a judgement of 3 March 2016, on the following grounds:

  • Image recording constitutes "personal data" under Spanish data protection regulations, and the general rule requires to obtain the individuals' consent before gathering and processing personal data.
  • However, the law sets out certain exceptions where consent is not needed, including when the data refers “to the parties of an agreement or pre-agreement in an [···] employment [···] relationship” and it is “necessary for its maintenance or execution”. This includes data which is necessary for the employer to exercise its right to monitor and control performance within the employment relationship. This means that, in the employment context, consent takes second place as it is an implied term of the relationship.
  • Notwithstanding the above, the employer still has a duty of information of monitoring practices towards its employees and a breach of this duty by amounts to a violation of the right to privacy. Nevertheless, proportionality should be taken into account, assessing the situation on a case-by-case basis.

In the case at stake, given that the company had publicly displayed information on the use of video surveillance in the shop, the Constitutional Court considered that the relevant information duty had been complied with and that, therefore, the images acquired were legitimate and – accordingly - the dismissal fair.

Data privacy: no obligation to provide telephone number and e-mail account

A call centre company included in its standard form employment agreement a clause stating that communications relating to the employment relationship could be performed via text or e-mail, according to the relevant communication details (telephone number and e-mail) provided by the employee, with an obligation to timely inform of any change.
The unions brought a claim before the courts, claiming the abusiveness of such a clause, and – in first instance – it was declared was null and void. The company appealed before the Supreme Court, which, in a judgment dated 21 September 2015, stated that:

  • phone numbers and e-mail addresses are not data necessary for the maintenance of the employment relationship. Therefore they are not covered by the exceptions set out by law (as opposed to other employee data where consent is not needed);
  • express consent is required to obtain and process that data. The clause included in the standard form employment agreement is not valid for these purposes, as in that case the consent cannot be considered "free and voluntary".

Accordingly, the Supreme Court confirmed the judgment of first instance and declared that clause null and void.

Raquel Flórez

United Kingdom

UK Budget

The new budget was announced by the Chancellor, George Osborne, on 16 March. Key announcements are as follows:

  • In a drive to simplify tax by aligning the treatment of income tax and national insurance (social security) contributions (NICs), termination payments in excess of £30,000 will now be subject to both income tax and NICs, instead of income tax (only). NICs are due from both employees (for high earners, at 2%) and employers (generally at 13.8%) so this will result in additional costs for both parties.
  • The government is planning to introduce legislation to restrict tax relief for home to work travel (ie to the normal place of work) and subsistence expenses for workers. 
  • The exemption available for capital gains on shares held through the relatively new Employee Shareholder Status arrangements will be limited to £100,000.
  • All those except the highest earners will benefit from an increase in the personal allowance (earnings under this allowance are not subject to income tax) to £11,500, and in the increase of the threshold after which earnings are subject to higher rate tax (40%) to £45,000. The government has committed to increase these to £12,000 and £50,000 respectively by the end of the current Parliament.
  • The government has committed to shutting down disguised employment regimes and closing loopholes in tax avoidance in order to raise £12 billion in this Parliament. This is likely to mean companies can expect closer scrutiny of arrangements which do not firmly fall outside of the category of ‘employment relationships’.

Gender Pay Gap Reporting Regulations

As companies start to consider how they will comply with the new requirements, the government is still consulting on the final form of the Regulations. The consultation closed on 11 March and a published response is expected in the summer. In the meantime, the Government Equalities Office has confirmed to certain parties to the consultation that it is intended that the definition of ‘relevant employees’ (ie the persons in respect of whom reporting is required) is intended to be broader than just ‘employees’ in the strict sense. Accordingly, when the final regulations are published it may be that the definition includes other categories of workers, including members of LLPs.
It is expected that the regulations will come into force on 1 October 2016. If so, employers will be required to have a snapshot of gender pay gap data prepared for 30 April 2017 and will need to publish the first gender pay reports within 12 months of that date.

Sunday trading

The government lost the vote in Parliament which would have resulted in local councils having the power to loosen the restrictions on large stores trading for longer than 6 hours on Sundays. For now, those restrictions will remain in place, keeping the pressure on ‘brick and mortar’ retailers who are competing with their 24/7 online rivals.

Trade Union Bill

The government has put forward a number of amendments to soften the impact of the Trade Union Bill which is currently being debated in the House of Lords, including:

  • Ballot papers would only need to set out a “summary” of the dispute rather than a “reasonably detailed indication”.
  • The effect of the 40% threshold for ballots related to ‘important public services’ will be limited by excluding workers if the union “reasonably believes” that they are not “normally engaged in the provision of important public services” at the time of the ballot.
  • The proposal to increase the notice period for industrial action from seven to 14 days is to be modified so that a seven-day notice would suffice if the employer agreed.
  • A ballot in favour of industrial action would remain valid for six months (increased from four months), or up to nine months if the employer agreed.
  • The requirement for picket supervisors to identify themselves by wearing “a badge, armband or other item”, would be reworded as a requirement to wear “something” to identify themselves. The change seems to be superficial only.

It remains to be seen what the final legislation will look like, and the debates are ongoing.

Whistleblowing claims must include information, not mere allegations

In rejecting an appeal of a whistleblowing claim, the Employment Appeal Tribunal (EAT) recently reminded employment tribunals to concentrate on whether an alleged disclosure is indeed conveying information.
As held in Cavendish Munro Professional Risks Management Ltd v Geduld, in order to be protected by the whistleblowing provisions in the Employment Rights Act 1996 (ERA), it is not sufficient for a worker to merely voice concerns or make allegations alone. The ERA, however, does not draw a distinction between information and allegations and in practice it is not always helpful to do so, as the two are often intertwined and not necessarily alternative concepts.
In the recent decision of Kilraine v London Borough of Wandsworth the EAT emphasised that the key question is simply whether or not the relevant complaint by a potential whistleblower actually includes a disclosure of information - it is irrelevant that the information also constitutes an allegation.

Whistleblowing complaint about cramped working conditions could be protected

In the recent case of Morgan v Royal Mencap Society, the claimant, who had suffered a workplace injury, complained about her cramped working conditions, arguing this was adversely affecting her health and safety, believing her disclosures would be in the public interest. The tribunal, however, found that her complaint did not amount to a protected disclosure for whistleblowing purpose and accordingly struck out the claim.
Disagreeing with the tribunal’s view, the EAT considered that under current whistleblowing legislation, any disclosure of information reasonably believed to be made in the public interest and shown to relate to specified types of wrongdoing qualifies as a protected disclosure. This means that, so long as the worker subjectively believes that the relevant wrongdoing occurred or is likely to occur, and this belief is considered objectively reasonable by a tribunal, there is no need for him to prove that the facts or allegations disclosed are actually true in order to enjoy protection against detriment or dismissal.

What will Brexit mean to employment, pensions and benefits?

A great deal of UK law derives from the EU from an employment and benefits perspective. Discrimination rights, transfer of undertakings regulations, working time regulations, family leave, collective consultation obligations and duties to agency workers - just to name a few - all originate from EU law sources.
Practically speaking, if the UK were to vote to leave, the UK government would have to naturally repeal all the legislative provisions currently governing aspects of employment, pensions and benefits. In reality, however, the UK government is far more likely to allow EU law to continue to influence UK employment, pensions and benefits law, even after Brexit, for two compelling reasons.
First, some EU employment laws merely subsumed protections that were already provided by UK law (eg UK equal pay). And secondly, should Brexit go ahead, the UK will have to observe EU law to some extent if good relations with the EU are to be maintained. Indeed, the price of a trade agreement with the EU is likely to adhere to a certain amount of EU employment and social protection.
From a pensions perspective, the short-term impact would be minimal as much of the regulation of UK pension schemes, although shaped by EU legislation, is not dependent on it. A post-Brexit UK would still maintain the UK pensions legislation that enacted the Treaties, Directives and regulations of the EU.
In the long-term, the impact would depend on the approach taken by the UK legislature to those areas of pensions law which are currently drawn from European legislation. The legislature could, if it so desired, rewrite much of our existing pensions legislation since it would no longer be bound by the constraints of Europe (subject, of course, to the requirements of any subsequent free trade agreement). Please refer to the recent briefing Brexit: The UK Pensions Perspective for a more detailed look at this issue.

Nicola Squire

United States

U.S. Department of Labor Issues Final ERISA Fiduciary Rule

On April 6, 2016, the U.S. Department of Labor issued its final fiduciary rule under the Employee Retirement Income Security Act of 1974 (ERISA), which, among other changes, modifies the test used to determine fiduciary status for ERISA purposes, adds new prohibited transaction exemptions and amends existing exemptions. This final rule generally expands the application of ERISA’s strict fiduciary standards to various types of investment and asset management recommendations from broker dealers, banks and other financial organizations to individual retirement accounts and other employee benefit plan clients. The final fiduciary rule will generally become effective as of 10 April 2017, with a phased implementation through 1 January 2018 for certain exemptions.

Howard Klein